Published 10:00 pm, Monday, July 9, 2001

The Italian government has notified The Boeing Co. that its air force will be the launch customer for the new 767 military air-refueling tanker to replace aging 707 airframes now used for that role.

Boeing's 767 design won out over two competing entries from rival Airbus.

Although the $700 million deal is small -- four tankers with options for two more -- it is considered a significant development for Boeing and a boost for the 767 program.

The potential worldwide air-refueling tanker market is estimated to be worth about $50 billion.

If Boeing can establish the 767 as a tanker, it will mean continued production for years to come of the widebody jet that is built in Everett. The tanker will roll down the same assembly lines as the passenger model, though it will be flown elsewhere for the military modifications.

A tanker is used to refuel other planes, such as fighters, in flight.

Although Boeing is forecasting a potential overseas market of about 90 of the 767 tankers over the next 10 years, the real plum the company is eyeing is in this country.

The U.S. Air Force is looking at the possibility of eventually replacing its fleet of about 550 KC-135s, a modified version of the old 707. It is considering the 767 as a replacement plane, but no decision has been made.

Regardless, any 767 tankers that Boeing sells will boost the order backlog for a plane that has seen sluggish sales the past few years. Although Boeing has delivered more than 800 of the jets since the 767 entered service in the early 1980s, it sold only a dozen of the passenger models last year. Sales have been better this year, with 24 firm orders announced so far.

Those 24 orders do not include the four 767 tankers for Italy. A formal agreement with Italy is not expected to be signed until next spring, said Boeing spokesman Paul Guse in St. Louis.

The first of the four tankers is expected to be delivered to Italy in 2004, with the remaining three delivered in 2005 and 2006.

That first plane will be modified as a tanker at Boeing's facilities in Wichita, Kan. The others will be modified in Italy by Aeronavali, a subsidiary of Italy's state-owned defense company Finmeccanica.

Boeing and Finmeccanica will jointly work on the tanker development, Boeing said yesterday.

The Italian air force now operates four of the older KC-135 tankers, which are becoming expensive to keep flying because of their age.

Airbus and EADS, the European aerospace company that owns 80 percent of Airbus, had been offering Italy either a modified A310 or A330 as a tanker replacement plane.

The Germans were pushing for used A310s; the French wanted Italy to be the launch customer for a tanker based on the A330 airframe.

Instead, Italy reportedly decided that Boeing's 767 design offered a better combination of performance and cost. Also, Boeing has a proven track record of building air-refueling tankers with the KC-135.

The tanker version of the 767 will leave the main cabin free to carry either cargo or military passengers or both. It could be used simultaneously as an airlifter and tanker.

In addition to Italy, Britain, Japan and Australia are among countries looking to replace their aging military tanker fleets.

Earlier this year, Boeing and BAE Systems, which owns the remaining 20 percent of Airbus, announced an alliance to try to win the $18 billion contract to supply 767 tankers to Britain to replace older VC10 and TriStar tankers. Britain hopes to select the winner in 2003.

It is not clear when the U.S. Air Force will decide on a replacement for the KC-135, which first entered service in 1957. The last of those planes was delivered in 1965.

During a Congressional hearing last month, Sen. Ted Stevens of Alaska told Air Force Chief of Staff Gen. Michael Ryan that he was concerned about the age of the Air Force's fleet of tankers.

Stevens said as many as one third of the 550 Air Force tankers are in depots for repairs at any given time and not available for service. He said the 767 tanker offered "great potential for the future."

Ryan said at that hearing that the average age of the KC-135 fleet is 38 years and that the Air Force will likely replace them in the next 15 years.